Posted by: The Tim

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market.

29 responses to “July Reporting Roundup: Honest Reporting Contest Edition”

  1. Ira Sacharoff

    Hmmmm….Just before the peak and then major decline here, prices were up and sales were down. We could probably dig up a real estate headline from the spring of 2007 that would have said the same thing.
    I’m not suggesting that history repeats itself and we’re on the way to another 25%+/- decline, but when prices rise ( even though prices aren’t really rising now, it’s just that there are fewer buyers of lower end homes), sales generally decline at some point in the near future.
    But as far as reporting goes, I miss Aubrey Cohen reporting on real estate. He seemed to be a little more thorough and willing to present opposing viewpoints.

    Rate this comment: Thumb up 0

  2. ray pepper

    So much of the Media (and Moody’s) appear to try to bring back some “Animal Spirits” to this market place but its futile.

    We can analyze all day long but people will continue to short sale, deed in lieu, and foreclose their homes for many years to come thus keeping a lid on any kind of appreciation that is significant.

    Patience to Buyers is critical and you will know you found a GEM when you calculate the cost to own is in line with the cost to rent. Its just that simple. In Nevada and Arizona I see it everyday. These 300k homes that are now 80-100k sell and the cycle starts again with a homeowner on a level playing field. All these homes need to come back or the FED needs to get serious and cramdown these principles for owners to stay.

    I gotta say it………………….People will only remain stupid for so long…….

    Rate this comment: Thumb up 0

  3. Dave0

    RE: Ira Sacharoff @ 1 – Another major trend before the peak was inventory rising as sales declined. That scenario happened again in July. I wonder if it is the start of a trend, possibly showing the first sign of more price declines.

    Rate this comment: Thumb up 0

  4. Dave0

    By ray pepper @ 2:

    I gotta say it………………….People will only remain stupid for so long…….

    Not so sure about that, the masses have been stupid for a while, and with our education system getting worse, the masses will remain stupid or get dumber over time.

    Rate this comment: Thumb up 0

  5. softwarengineer

    Typical July To Me

    If you compare it as only a bit worse than the depression data from 2009.

    Rate this comment: Thumb up 0

  6. Ira Sacharoff

    By Dave0 @ 4:

    By ray pepper @ 2:
    I gotta say it………………….People will only remain stupid for so long…….

    Not so sure about that, the masses have been stupid for a while, and with our education system getting worse, the masses will remain stupid or get dumber over time.

    Sorry, but I just can’t resist responding with a couple of quotes:
    HL Mencken said ” Nobody ever went broke underestimating the intelligence of the American public.”
    And Winston Churchill said “. The best argument against democracy is a five-minute conversation with the average voter.”

    Rate this comment: Thumb up 0

  7. ray pepper

    RE: Ira Sacharoff @ 6

    I love it…Those are great!

    I know I can use those two quotes at some point again!

    Rate this comment: Thumb up 0

  8. Cheap South

    RE: ray pepper @ 2

    Nothing new Ray. This has been cooking for 25 years now. You know you are looking at tragedy sooner or later, when people count on two full time salaries to meet basic needs. Homes must come down to the 2x-3x median household income; even if it never happened before in Seattle. We are in uncharted territory for a couple of generations.

    Rate this comment: Thumb up 0

  9. HappyRenter

    “The median price bumped up because low end sales dried up”

    Is this due to the expiration of the tax credit?

    Rate this comment: Thumb up 0

  10. Kary L. Krismer

    As to the typical July comment, if you look at the June to July numbers for prior years, it is a bit surprising, but many July months have lower figures than June. Perhaps the rate of drop isn’t typical, but we were expecting that with the tax credit falling off. But just dropping in July isn’t unusual for some reason.

    As to the Times not picking up the sale number issue, I wouldn’t really expect them to. The write up these reports rather quickly, within a couple of hours of the numbers being released, and unless they also track recorded deeds like Tim does, there’s no reason why they would question that number.

    Rate this comment: Thumb up 0

  11. Kary L. Krismer

    By HappyRenter @ 9:

    “The median price bumped up because low end sales dried up”

    Is this due to the expiration of the tax credit?

    Almost certainly. We have been discussing that as a possible outcome of the expiration of the credit for a couple of months.

    Rate this comment: Thumb up 0

  12. RoflCatDown

    Prices rising without an accompanying rise in salaries is not a good thing. It is not a recovery if you do not have more people moving into the market to buy, and as prices rise the ability for people to buy something goes away unless their salaries rise at a same or greater rate. Something that hasn’t happened in Seattle.

    Rate this comment: Thumb up 0

  13. HappyRenter

    “sales are typically down in July because a lot of people take vacations.”

    I thought it was the rain that kept people inside causing a slow market. So, when does Seattle usually experience a more active market? In the summer it’s slow because it’s vacation time, but the rest of the year it’s the weather which keeps Seattleites away from the market.

    Rate this comment: Thumb up 0

  14. Scotsman

    RE: ray pepper @ 2

    “I gotta say it………………….People will only remain stupid for so long…….”

    Look Ma- an optimist!! ;-)

    Rate this comment: Thumb up 0

  15. Comfortably Numb

    By Cheap South @ 8:

    RE: ray pepper @ 2

    Nothing new Ray. This has been cooking for 25 years now. You know you are looking at tragedy sooner or later, when people count on two full time salaries to meet basic needs. Homes must come down to the 2x-3x median household income; even if it never happened before in Seattle. We are in uncharted territory for a couple of generations.

    By ray pepper @ 2:

    Patience to Buyers is critical and you will know you found a GEM when you calculate the cost to own is in line with the cost to rent. Its just that simple.

    I gotta say it………………….People will only remain stupid for so long…….

    Agree on all the above. My husband is making over six figures with one of the major Fortune 500’s and I’m currently a stay at home mom for two little ones. A year ago both of us were bringing in two FT salaries, and with daycare costs (scary numbers, folks!) factored in – we just were not comfortable with the (then) housing prices. The current housing prices still have us and many, many of his co-workers who are making comparable salaries staying on the sidelines of the real estate market. We’re currently renting a brand new town home that sold for 500k in 08′ for $1450 a month, and while we fully expect to shell out more for a mortgage – the current housing prices, interest rates nor the 8k incentive have us running to sign anything other than a lease again.

    Common sense seems to have been completely lost in the Seattle real estate market, by both sellers and real estate agents who still seem to have their head up in the clouds with their view of ‘low prices.’ There are many ready and willing buyers here *waves* who are simply waiting for the prices to come back down to earth.

    Rate this comment: Thumb up 0

  16. DrShort

    We’re currently renting a brand new town home that sold for 500k in 08′ for $1450 a month, and while we fully expect to shell out more for a mortgage – the current housing prices, interest rates nor the 8k incentive have us running to sign anything other than a lease again.

    New townhomes are especially undesireable and it’s probably worth about $380K now. If you put down 20% and taxes are around $3K a year, you’d be looking at a total monthly PITI payment of $1,840. But you’d gain around $200 a month in tax savings leaving a net monthly payment of $1640 — no too terribly different from your rent.

    ps. don’t buy a new townhome.

    Rate this comment: Thumb up 0

  17. Hugh Dominic

    although some brokers wonder why more buyers aren’t taking advantage of historic low interest rates.

    because we’re unemployed!

    Rate this comment: Thumb up 0

  18. David Losh

    While in other news:

    “Economists are skeptical that cheaper credit or even more government aid will get Americans shopping more and businesses to hire. They also say some jobs in construction and other housing-related fields, and in manufacturing, will never return to pre-recession levels — a shift in the basic structure of the economy.”

    Rate this comment: Thumb up 0

  19. Jonness

    By Ira Sacharoff @ 6:

    And Winston Churchill said “. The best argument against democracy is a five-minute conversation with the average voter.”

    Thanks Ira. That is a classic! :)

    Rate this comment: Thumb up 0

  20. drshort

    By David Losh @ 18:

    While in other news:

    “Economists are skeptical that cheaper credit or even more government aid will get Americans shopping more and businesses to hire. They also say some jobs in construction and other housing-related fields, and in manufacturing, will never return to pre-recession levels â�� a shift in the basic structure of the economy.”

    The next generation will have big social and economic challenges as job options and wages for low and unskilled workers dwindle. The government needs to take drastic measures to remove overhead and taxes on American labor. We need to start funding health care and retirement through consumption taxes like a VAT rather than taxes and mandates on labor. All that does is push jobs overseas and make US products less competitive.

    Rate this comment: Thumb up 0

  21. One Eyed Man

    RE: drshort @ 20

    Unfortunately, I agree. As much as I hate the idea of a regressive tax structure, global competition makes a modified VAT (basically a sales tax) the most reasonable choice in order to keep domestic goods on a level playing field with imports. An income tax and a true VAT imposed at various stages of domestic production both add to the cost of domestically produced goods and thus hurt the ability of domestic producers to compete. A tax on the ultimate consumer applies equally to both foreign and domestically produced goods.

    Rate this comment: Thumb up 0

  22. Scotsman

    RE: One Eyed Man @ 21

    Naw- drop them all for a national sales tax. Then even drug dealers and cheating business owners have to pay, and there is no need for the IRS and all that government involvement.

    Rate this comment: Thumb up 0

  23. One Eyed Man

    RE: Ira Sacharoff @ 6

    Although most of us tout ourselves as believers in what some refer to as Jeffersonian democracy, that is to say, the idealistic and egalitarian form of democracy that champions the collective wisdom of the common man, when times are tough we all seem to show our true colors as Hamiltonian elitists. Just like Hamilton championed the need for the electoral college in the Federalist Papers, all of us seem to have lost faith in the collective ability of the common man to reach a decision likely to lead to a better future. I would say God help us wrestle with the hypocrisy that causes us to abandon our own ideals, but ironically, I’m an agnostic and have little if any faith that my prayer will be answered.

    Rate this comment: Thumb up 0

  24. David Losh

    What I think is that there should be an incentive for small business, and a penalty for corporations.

    The acquisitions, and mergers of the 1980s over burdened the global economy with the profit incentive rather than sustainable business practices.

    The struggle I have is with profit.

    Worker productivity was in this same article. That’s an odd term, but the point was that worker productivity wasn’t increasing. Who would even track that as a variable? That meant, that if workers couldn’t produce any more that maybe companies would have to hire more people. Well hiring people is the point.

    Fewer workers, less money in circulation. Higher profits doesn’t translate into more consumer spending. A stock market based on profits doesn’t accomplish the goal of economy.

    Capitalism can be a beautiful thing if it is broad based. What I would like to see is a decrease in employee taxes, FICA, for small business, and a tax on corporate profits. Paying out millions in executive bonuses, may cut into profits, but those bonuses are based on profit.

    What I’m saying is that corporations should be forced to spend more, to have more in the way of expenses, or pay that money in taxes. The alternative is that they can make more profits by moving to some other country. It would have to be Third World, because most developed economies, elsewhere, have already figured out that consumers make the economy go around.

    Rate this comment: Thumb up 0

  25. Scotsman

    RE: David Losh @ 24

    “Worker productivity was in this same article. That’s an odd term, but the point was that worker productivity wasn’t increasing. Who would even track that as a variable? That meant, that if workers couldn’t produce any more that maybe companies would have to hire more people. Well hiring people is the point.”

    How much a worker can produce is the single largest factor that controls how much they can be paid. When productivity is low, so are wages. A smart company hires as many workers as it can up to the point where the workers don’t produce enough more to generate any additional profit. The solution is not as you propose- more workers- but rather making workers more productive, typically by giving them capital (tools) to work with. No profits mean no money left over to buy more tools with, means no increases in productivity or wages for workers. But it’s always interesting to read your original thinking.

    Rate this comment: Thumb up 0

  26. David Losh

    RE: Scotsman @ 25

    profit is after capital expenditures, wages, bonuses.

    Let’s see, was it $26 trillion in derivitives? Is it Institutional Investing that is driving the stock market? Didn’t you have a comment about how much banks own and control?

    Profit isn’t being plowed back into the American Economy. Some thing went wrong.

    Rate this comment: Thumb up 0

  27. Kary L. Krismer

    By David Losh @ 26:

    Profit isn’t being plowed back into the American Economy. Some thing went wrong.

    Health care legislation and a President that spews anti-business rhetoric at the drop of a hat. Why would they hire when all they want to do is survive and keep a low profile?

    Rate this comment: Thumb up 0

  28. Tom

    Lake Stevens isn’t in King County. So all of the data provided in response is N/A.

    Rate this comment: Thumb up 0

  29. David Losh

    RE: Kary L. Krismer @ 27

    This started in the late 1980s, so I don’t see what today has to do with it. We are only in the after math stages today. Something went wrong.

    Rate this comment: Thumb up 0

Leave a Reply

Do you want a nifty avatar picture next to your name, instead of a photograph of Tim's dog? Just sign up with Gravatar, and make sure to use the same email address in the form below. It's that easy!

Please read the rules before posting a comment.

You have 5 comments remaining on this post.

Archives

Find us on Google+